To Discount or Not to Discount: Weighing the Pros and Cons
The Benefits of Discounted Projects
As a video production company, it’s not uncommon to be approached by clients with good causes, charities, or even friends who are looking for a discount or a favour. It’s tempting to want to help out and build relationships by offering discounted prices, but there are risks involved that may not be worth it in the long run.
One of the positive aspects of taking on discounted projects is that it can be a great way to invest in a relationship with a potential long-term client. Repeat business is amazing in any industry, and video production is no exception. It saves time and effort to have a client who is already familiar with your work and your process. Plus, it’s nice to help out a good cause or a friend.
The Downsides of Discounted Projects
However, there are also downsides to taking on discounted projects. Firstly, if the client doesn’t come back for more work, you may have invested a significant amount of time, energy, and resources into a project that doesn’t offer a return on investment. This can be frustrating and can harm your bottom line.
Secondly, the first time you work with a client often involves more administration and planning than subsequent projects. This takes up valuable time and resources, and if the client doesn’t come back for more work, it’s unlikely that you’ll recoup those costs.
Thirdly, taking on discounted work may mean putting off more profitable work. This can ultimately harm your business and make it harder to stay afloat.
Mitigating the Risks
So, what can you do to mitigate these risks? Firstly, be upfront with the client about your rates and what you can offer. If you’re willing to offer a discount, make sure you’re clear about what that entails and what the limitations are. Make sure the client understands that this is a one-time offer and that subsequent projects will be charged at your regular rates.
Secondly, make sure you have a contract in place that outlines the scope of the project, timelines, deliverables, and payment terms. This will help you avoid any misunderstandings or disputes later on.
Finally, make sure you’re able to prioritize your workload and manage your time effectively. If you’re taking on a discounted project, make sure you’re still able to meet the needs of your other clients and that you’re not putting yourself in a position where you’re sacrificing quality or profitability for the sake of a discounted project.
In conclusion, taking on discounted video production projects can be a good way to build relationships and help out good causes. However, it’s important to weigh the risks and ensure that you’re not sacrificing profitability or putting yourself in a position where you’re unable to manage your workload effectively. By being clear about your rates and limitations, having a contract in place, and managing your time wisely, you can help mitigate these risks and ensure that any discounted work you take on is a good investment in your business.
If you would like this blog then you will definitely like our blog on the Speed-Cost-Quality triangle. You can have two but not all three.